Quick answer
Life insurance with living benefits is a policy that includes accelerated benefit riders (ABRs) allowing you to access a portion of the death benefit while you are still alive if you are diagnosed with a chronic, critical, or terminal illness. Most A-rated carriers now include ABRs at no extra cost. Acceleration is typically tax-free under IRC Section 101(g), and it reduces the remaining death benefit dollar for dollar.
Best Life Insurance With Living Benefits
The carriers below all include strong living benefit riders on their term and permanent life insurance policies. Each is A.M. Best A or higher. The depth of the living benefits varies materially by carrier, so we have noted what each one is best for.
| Company | Recommendation | Rating | Best for | Quote |
|---|---|---|---|---|
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Recommended. LiveWell Term, IUL, and Whole Life. Chronic, critical, and terminal illness ABRs standard. Up to 100 percent acceleration on terminal illness. |
★★★★★ National Life Group Review |
Best overall living benefits. Strongest combination of chronic, critical, and terminal illness ABRs in the market. | Go |
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Recommended. Term Life Express and Income Advantage Whole Life with ABRs. Critical illness rider up to $250,000. Terminal illness ABR standard. |
★★★★★ Mutual of Omaha Review |
Best mainstream carrier for living benefits with strong combined term and whole life options. | Go |
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Recommended. Strong Foundation Term and Your Term with chronic, critical, and terminal illness ABRs. Family Health Benefit rider included. |
★★★★★ Foresters Review |
Best fraternal carrier with chronic and critical illness ABRs plus member benefits. | Go |
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Recommended. Guaranteed Whole Life and Founders Plus IUL with strong ABRs. Chronic illness rider with monthly or lump-sum payout option. |
★★★★★ A+ rated mutual |
Best high-dividend whole life with chronic illness ABRs. Strong for accumulation-focused buyers. | Go |
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Recommended. Quality of Life Insurance term and UL. Acceleration triggered by ADL impairment, not just diagnosis. Up to 95 percent acceleration. |
★★★★★ Corebridge Review |
Best activity-of-daily-living trigger for chronic-illness acceleration, useful for long-term-care planning. | Go |
Are You Prepared for an Unexpected Illness?
According to the American Cancer Society, there will be an estimated 1.7 million new cancer cases diagnosed and more than half a million cancer deaths in the U.S. this year.
The American Heart Association reports that cardiovascular disease is the leading cause of death globally, accounting for more than 17.3 million deaths per year. By 2030, that number is expected to exceed 23.6 million.
Furthermore, the Administration for Community Living says the average cost for long-term care in the U.S. exceeds $6,000 per month for a semi-private room in a nursing home and $3,000 per month for care in an assisted living facility.
Many people simply are not prepared for a chronic, critical, or terminal illness. They think that just because they have a health insurance or disability plan, they’ll be sufficiently covered in case of a sudden or serious health problem, such as a heart attack, stroke, or cancer diagnosis. The fact is that’s probably not true.
A great health insurance plan might cover a large part of the medical costs associated with such an illness, but there could be deductibles, copayments, and out-of-pocket expenses to deal with first. Plus, a health insurance plan won’t help you with lost income while you’re sick or recovering from your illness. A disability plan might help your financial situation while you’re away from work, but even the best of those can cover only about half of your lost wages.
Regardless of how old you are, how much money you make, or what kind of health coverage you have, two things are inevitable in the case of an unexpected illness: Your expenses will go up, and your income will go down, resulting in debt that could leave you paralyzed financially.
According to a study by Harvard researchers, over 60% of all personal bankruptcies in the U.S. are a direct result of medical problems. What’s even worse is that nearly 80% of the people included in this study who were suffering from a critical condition had health insurance at the start of their illness. This clearly demonstrates that additional protection is needed, more than what many of the health and/or disability plans are able to provide.
That’s where life insurance with living benefits, also known as an accelerated death benefit rider, can help you when you need it most.
Dealing With a Critical, Chronic, or Terminal Illness
Let’s say you develop a chronic illness that’s going to require a long-term approach to getting better. Or, you have a heart attack or a stroke, or you find out you have cancer. In each of these cases, there’s a good chance that you could recover and continue to live a full and meaningful life, if you’re able to afford the cost of proper treatment and care.
Unfortunately, your health insurance coverage will likely offer only a partial solution. Wouldn’t it be helpful if you could access your death benefit to help pay for costs related to your care, rather than digging into your savings account?
According to a USA Today report, one in four cancer patients or their families said they spent all or most of their savings to pay for treatment. And, one in eight people with advanced cancer turned down recommended care because of the costs involved.
“Growing numbers of people simply can’t afford to get the care we know they need,” said John Seffrin, CEO of the American Cancer Society. “We hear about a growing number of people turning down treatment.”
Some insurance companies will accelerate most of your death benefit if you qualify as terminally ill, but that seems like more of a death benefit for a death sentence. With living benefits life insurance, you can be covered in three separate areas:
- Critical illness. Typically pays one lump sum if you have a serious illness such as cancer, or a heart attack or stroke.
- Chronic illness. Typically pays a monthly benefit if you’ve been diagnosed as chronically ill and you are unable to perform two activities of daily living, such as bathing, dressing, or eating. This benefit could pay up to a quarter of the amount of your death benefit annually.
- Terminal illness. Typically pays a benefit if you are diagnosed with a terminal illness and are told that your life expectancy is 12 to 24 months. These funds can be used for experimental medicine, preparing for final expenses, or any other purpose you deem necessary.
What Happens When You Have Life Insurance With Living Benefits?
If you were to experience a qualifying critical, chronic, or terminal illness, such as a heart attack, a stroke, or cancer, to name a few, you would have the option to collect part of your death benefit to help pay for expenses associated with your illness.
Of course, the amount of money your beneficiary would receive as part of your death benefit would be reduced by that amount. But, having the option to accelerate your death benefit funds could be a critically important step in helping you and your family through an unexpected health crisis. It might even be the saving grace that helps you enjoy a long and healthy life after your illness.
Ready to compare life insurance with living benefits? Start here
